A political economy of natural disasters does not exactly exist yet. There are no classes in it that I know of. A dearth of writing attempts to define it. Yet, some of its lessons cry out following Hurricane Harvey’s wall banger into the coast of Texas.
One is the role of capital formation in minimizing death. At the time of this writing, 26 Harvey-related deaths have been confirmed in the United States. That’s 26 too many, but imagine what the death toll would have been if a similar storm slammed into comparable population centers in the Pacific Rim, Venezuela, or other outposts of the Third World. No doubt: They would be in the thousands, devastation even more widespread, and massive stores of foreign aid and charity mobilized.
What makes Houston different has to do with property rights institutions taking root and developing there over decades, making it a center for capital investment, because capital always flows to those areas where it is most secure. The continued increase in the quantity and quality of capital over time increases wealth, allowing its owners to afford better infrastructure and safety, relative to more benighted areas that attract less capital over time. To get an idea about the effects of decades of capital formation on Houston in 2017, consider the devastation that befell Galveston in 1900, when another Category 4 hurricane swept the Texas coast and claimed about 8,000 lives.
Another lesson is the emergent insecurity of the state when disasters strike. We saw this following Katrina, when government officials stopped convoys of aid – privately organized and funded – that were attempting to enter New Orleans just hours after Hurricane Katrina passed. Other efforts to deliver aid were squelched when a flotilla of ships were turned away at the Port of New Orleans. It was as though FEMA would not allow credit for aiding the suffering to go anywhere but itself.
This post was published at Ludwig von Mises Institute on August 31, 2017.
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